Regarding your point that F/P doesn’t have any potential defences, I would have thought that there’s some chance F/P could argue:
1) Only a certain amount of money was received from FTX-proper within the 90 clawback window (impossible for us outsiders to know how much that would impact anything, if at all, but it could reduce the quantum from ‘anything F/P has ever done’ to ‘the recent activity of F/P’), and
2) Notwithstanding the above, that the new value defense applies. That is, F/P was given money to do a particular thing (make grants) and that it discharged its obligation to do that thing (it made the grants).
Any views on that?
(Usual caveat of not being a US bankruptcy lawyer)
There are two mechanisms likely at play here—fraudulent conveyance under 11 USC 548 and applicable non-bankruptcy law doesn’t have a 90 day limit.
I don’t see how F/P provided new value to the insolvent FTX parties, or any value at all, in exchange for the transfers. The theory behind new value is that the other creditors are just as well off as they were before and so there has been no preference.
It doesn’t seem to me the payments were made to hinder / defraud (I guess that’s a stage-of-mind point I don’t have information on) ; the payments weren’t undervalued ; FTX was solvent when (at least some of) the payments were made.
Thanks for this post.
Regarding your point that F/P doesn’t have any potential defences, I would have thought that there’s some chance F/P could argue:
1) Only a certain amount of money was received from FTX-proper within the 90 clawback window (impossible for us outsiders to know how much that would impact anything, if at all, but it could reduce the quantum from ‘anything F/P has ever done’ to ‘the recent activity of F/P’), and
2) Notwithstanding the above, that the new value defense applies. That is, F/P was given money to do a particular thing (make grants) and that it discharged its obligation to do that thing (it made the grants).
Any views on that?
(Usual caveat of not being a US bankruptcy lawyer)
There are two mechanisms likely at play here—fraudulent conveyance under 11 USC 548 and applicable non-bankruptcy law doesn’t have a 90 day limit.
I don’t see how F/P provided new value to the insolvent FTX parties, or any value at all, in exchange for the transfers. The theory behind new value is that the other creditors are just as well off as they were before and so there has been no preference.
Which part of 11 USC 548 do you think applies?
It doesn’t seem to me the payments were made to hinder / defraud (I guess that’s a stage-of-mind point I don’t have information on) ; the payments weren’t undervalued ; FTX was solvent when (at least some of) the payments were made.